betonliamcasey

Author: betonliamcasey

  • Microgaming pulls out of the US. Great product, will be missed.

    Microgaming announced today that its pulling its software from US facing operators and the US market “for the time being”.

    They’ve driven the online casino market for many years now, and I’ve recently had a commercial presentation from them, when looking at some of their products. Their casino and flash products are still top-notch, and I’m a big fan of their ability to deliver from a technical and product point of view. Their Quickfire product is excellent.

    Is it a knee-jerk reaction to the “Black Friday” events? Possibly.

    Will it be permanent? Probably.

    Will it open up opportunities for other software vendors that will provide US-facing software? Yes, but you can be sure that MG’s top US-facing licensees know where they are going, and where they are moving to next.

    I know of various software providers that will be forming a (dis)orderly queue to step into the breach here, here’s hoping that they can keep licensee and player standards high.

    Who do you think will step up?

  • Canadian media does in-depth profile on elusive Pokerstars founder

    The Canadian broadsheet “The Globe and Mail” has put together a piece on the founder of Pokerstars, Isai Scheinberg. It’s not particularly in-depth, but the the fact that they’ve managed to find out much at all, shows the level of mainstream media interest in the current Poker case.

    The Globe and Mail compares the Scheinberg family to the Bronfmans, a Montreal clan (Scheinberg is variously described as Canadian or Israeli-Canadian) who famously turned U.S. Prohibition laws into a billion-dollar business.

    Some of the interesting facts included were that Isai placed 25th at a Texas Hold’em tournament at the 1996 World Series of Poker, and that he was involved with IBM, where he helped develop the Unicode standard. (Probably a great background, for the network development side of Poker, I’d say.)

    The article notes that he founded Rational Entertainment in 2001, which is effectively the company that’s responsible for the network & software development for Pokerstars.

    One thing that tends not to be mentioned in a lot of these stories is how the online poker companies should be held up as marketing icons, in the way that they’ve built solid, global brands inside a decade (some even shorter) and that their ability to manage the consumer life-cycle is virtually unsurpassed. You don’t build billion dollar businesses by sitting on your ass, that’s for sure.

    Their EPT purchase was a great move in terms of shoring up the offline poker branding market, with high-end TV production values (thanks to John Duthie), and a structure which means that they can get events into profit, even before a frame is shot. (Just take a look at the number of online EPT event qualifiers that Pokerstars run, all at a low buy-in, but their liquidity ensures biiiiig numbers.)

    The media and the US legal system may be out to get a big piece of Mr. Scheinberg and his family, but I’d give plenty of kudos to a someone who’s harnessed the power of popular culture, networks, branding and good old-fashioned chutzpah.

    Full Globe and Mail piece here.

  • My take on the Full Tilt / PokerStars / Absolute Poker ban for US players.

    If Pokerstars and Full Tilt Poker (in particular) weren’t so focused on world domination, and trying to one-up each other in terms of player volumes, I think that the events of Friday the 15th of April may not have happened.

    Why?

    In the race to keep maintaining player deposits from US customers, and given that credit cards are not an option, (particuarly for new customers), ACH transactions became much more important. ACH transactions are bank transfers where the player gives their bank details to the gaming company, and a transfer is inititiated through a payment processor, from the bank, to the player’s gaming account.

    Why was this important and how did it impact on Full Tilt, Pokerstars and Ultimate Bet?

    It became important because it allowed these companies to bypass credit card blocks, as the system that’s set up to monitor bank transfer payment types (in the ACH system) isn’t as robust as what the credit card companies have available. It’s also a system that requires a lot more monitoring, but is much more fragmented as (in the US) it is populated by the diaspora of small, local US banks.

    The banking system in itself in the US is a lot more fragmented than in other parts of the world. This means that  you’d need to have checks & balances in place, at a local level at every single bank that has the ability to send or receive funds from/to any 3rd party. Currently, the US banking system (and individual banks) conduct due diligence into the business of any merchant when the account is opened, but if the nature of that business changes (ie: from buying & selling coffee and having 1000’s of individual transactions from individuals buying coffee > overnight 10,000+ transactions which may or may not be related to online gaming) , the bank don’t necessarily have the resources (or the interest) to look deeper into it. Also, let’s face it, fees are now being generated on the 10,000+ transactions. Money talks.

    Now, if you are a big enough online gambling business, and have:

    a) enough cash at your disposal to buy a bank

    b) difficulty in getting payments from US players

    …why not buy a bank, where you can set up as many merchant accounts as you like – to process as many transactions as possible? Or, at least buy the companies/people that can do that for you?

    That’s what these guys did – and it came back to bite them on the ass. When one of their payment processors (a middle man) got caught, it looks like that in exchange for doing a deal with the DoJ in the New York – he reverse engineered a lot of the transactions and the money trail – thus allowing the DoJ to work out who was getting money from where, and where was it ending up.

    Read about Daniel Tzvetkoff’s story here.

    How does it impact on the companies indicted?

    If you combine that fact that it’s relatively easy to take a guess about the player volumes (and therefore revenues) that are being generated at these sites, because of poker aggregating sites like Poker Scout – and the feds could now reverse engineer the money trail due to Tzvetkoff. A perfect opportunity was presented to allow the DoJ to indict the owners of the largest online gambling companies out there. The Full Tilt owners (in particular) probably didn’t need to flaunt their market position so openly – three words. Red rag, bull.

    Personally, I think that it’s a perfect storm for these companies only. They’ve backed themselves into a corner with payment processing, market share and profile.

    My take?

    US players that have money on PS / FTP / UB are probably trying to get their EU based buddies to log into their accounts and chip dump to other EU accounts so that they can get their money out. Alternatively, if they want to get their cash, they’ll ned to relocate outside of the US. Otherwise, they are in for a long wait for their cash.

    Interesting times for the industry. I’d bet they’ll get more interesting.

    NB: it might slow up (in some cases) some recruitment – as people wait to see if there’s fallout (ie: good people) from the biggest companies in the space. It may actually accelerate it in other companies – as those at certain companies jump ship (wrongly) as a knee jerk reaction to this. My take? Wait and see. The sky’s not falling in, and in a month’s time, it’ll be business as usual for most people.

  • Full Tilt, PokerStars and Absolute Poker owners arrested & charged by feds

    Big news.

    On Friday, two (as yet unnamed) owners, out of 11, from PokerStars, Full Tilt and Absolute Poker were arrested and  all 11 charged with violating U.S. anti-Internet gambling laws, according to charges filed by federal prosecutors in Manhattan. One of the others is due to turn himself in later today.

    The domain names were also seized.

    Individuals named included Raymond Bitar, 39, of Full Tilt Poker, Isai Scheinberg, 64, of PokerStars and Brent Beckley, 31, and Scott Tom, 31 Absolute Poker. They were all were charged with violating the Unlawful Internet Gambling Enforcement Act and other laws.

    The charges outlined a scheme by the company owners and some of their employees to direct the gambling profits to online shell companies that would appear legitimate to banks processing payments.

    The story was breaking on Friday when I’m writing about this. But it’s telling that 2+2 has gone down, it wouldn’t surpise me if it’s gone from weight of news traffic.

    What’s going to happen on the short term?

    There’ll be a savage run on withdrawals, particularly from US players, and already overloaded processors are going to go wallop. It’ll have an knock on effect across any US facing sites too.

    Watch this space…

    UPDATE: Here’s the 2+2 thread if you want to see what the Poker community is saying.

    UPDATE 2: Better in-depth piece from Pokernews – here.

    UPDATE 3: Mainstream news stories from:

    ABC News,

    CBS News

    CNN.com

  • My crystal ball for Facebook advertising is working well.

    World domination is ongoing, law suits are pending and one of my Facebook predictions for marketers is coming true.

    I predicted that the cost of advertising on Facebook would rise (it’s up 40% in the last year) but that click through rates would drop. Ergo, it’s not a great destination for seriously bottom line focused marketers, companies and brands. See a few of my social media predictions – here.

    The anecdotal evidence that we’ve heard and seen from partners and competitors is that the return on investment for companies looking to use it as an aquisition tool for paying customers, is one word, crap.

    We do a lot of deals with portals, ad networks and other online destinations. Conversion rates can be anything from .5% to 5% depending on whether the site that our ad is appearing on is targeted (to our segment) or untargetd (maybe just sports, but no gambling). We’ve heard of 5 figure campaigns run with response and ultimate conversion rates of less than .001%. Ouch.

    Twitter’s growth is unabated, and it seems to have beaten Facebook to the punch on click through rate – but part of that is due to the nature of the medium (of the tweet). To have any engagement, you HAVE to click through a tweet to see more in-depth content – this is primarily due to the URL shorteners out there.

    Some of the feedback that we’ve had from customers is that when they are on Facebook, they are in friend-browsing mode and even less likely than usual to engage with random marketing, however targeted. It’s a little different when they are surfing outside of a social network. They are more open to suggestion.

    There’s a good piece on it here from last year, and that was before Facebook’s prices went up. Read it here.

  • Who’s taking the horse to France? (Part ii)

    Called it part ii because I’m short on inspiration today – and there’s more stuff that I think is interesting about gambling regulation in France…I’ve also got an update on Ladbrokes & Will Hill.

    Did you know that France’s gambling laws stretch back to 1539 and an edict passed by King Francois the 1st? That’s what the most recent updates to gambling legislation in France have to work from…

    There were 23 applicants for Sports betting licences in France and (I believe) 15 successful applicants. The poker guys will hear at the end of the month, the delay was due to the Maltese LGA putting in some questions to the EC.

    Who’s doing who?

    Ladbrokes has applied for a licence in a JV with French television broadcaster Canal Plus, subsidiary of Vivendi SA.

    Will Hill said at the end of May it was taking steps to cease accepting online gambling business from French clients, while it was considering applying for a French licence.

    BWIN has teamed up with Sajoo, a subsidiary of press publisher and events organiser Amaury.

    BetClic (already operates in the French market from Malta) said it’s applying for a French licence. BetClic is co-owned by French businessman Stephane Courbit and Monaco casino operator Societe des Bains de Mer  and part of Mangas Gaming.

    There was some interesting points made (in the Malta Business Weekly) by Bruno Hareng, an analyst at Oddo Securities.

    “Assuming eventual sports betting sales of €4 billion, there would only be €400 million (ie 10 per cent) for operators taking in account a payout rate of 82-83 per cent for players and 7.5 per cent state deductions. If we also subtract running and advertising costs, there would only remain about €50 million profit to be shared between the operators, hence the low number of eventual betting operators,”

    It’s going to be very interesting to see how the Operators all shake out in terms of brand penetration & ultimate dominance.

  • Who’s taking the (Gambling) horse to France?

    For those that remember the “…who’s taking the horse to France…” good ‘ole Kerrygold ads – here is the online gambling equivalent with the provisional list of operators that will be licensed by the French governement for online betting & gaming.

    It’s a list of 11 – and there are some notables missing.

    Obviously no Betfair or Bet365, no Ladbrokes or Will Hill. Ditto – Expekt, Unibet. And of course, no Full Tilt (but I believe that ‘Stars have put in a bid for a licence).

    Paddy Power are piggybacking the PMU with a deal whereby they are providing fixed odds product and trading infrastructure. Personally, think it’ll be interesting to see if they (PP) can ramp up the trading bodies to provide the PMU with the bandwidth they need for successful ROI. Have you tried to hire fluent french speaking sports traders? I’m betting there’s not as many out there as you’d think…

    My understanding is that there are 17 actual licence requests that have been retained by the French government – but that there hasn’t been much movement in terms of liberalising the blackjack / roulette or Lotto products.

    There are horses, and it is France – is that enough of a link?

  • Back in the saddle of blogging. Some online gambling thoughts first.

    It’s been too long.

    Blogging about the business of internet gaming / marketing /  gambling has just felt like extra work – and god knows, I’ve got enough real work to be going on with.

    What’s happening on the day-to-day business of online gaming front for me?

    I’m overseeing 2 x casinos, 2 x poker rooms, 3 sets of fixed odds games, our overall Partner function as well as heading up our Business Development function. It means that my time gets split between current egaming partnerships, what may be future ones, general business development – and managing a team of people.

    I’m going to have to get my sh*t together and get down some thoughts on the business of online gaming and in particular, what are the industry trends and my thoughts on them.

    Social Media – Macro Trends:

    * Social media will still not be monetised properly this year by brands.

    * Advertising on Facebook will get more expensive but click through rates will drop, and marketers will still spend shed-loads of money there, for little or no return

    * Overall email engagement will continue to drop for brands looking to engage customers through that channel. There’s too much email clutter, and social networks are cutting out the commercials by allowing P2P communication.

    * Twitter will block a bunch of aggregators that are currently piggy-backing their content, put them out of business, and try to work out their own business model (it’s got to be sponsored tweets + brand pages at a premium).

    Gaming Industry – Macro Trends:
    * B2B infrastructure deals between operators (who are now taking on the role of platform partners) – what’s going to be successful?
    * Growth in regulated markets – what markets are going to open and how tough will they be to enter?
    * Poker revenues falling off a cliff (for multi-platform operators) – why? Is it terminal?
    * Super affiliates becoming Operators (particularly Poker & Bingo) – do they have a future?
    * Live Betting is THE growth area for Sportsbooks – what sports and where’s the incremental revenue?
    * The growth of financial betting platforms – do they have a future with multi-platform operators?

    One final thing. I’d be amazed if online poker doesn’t get legalised on a state by state basis within the next two years. That’s a bonanza for online marketers in the US. Gird your loins…

  • The Field of Dreams – If you build it…

    …will they come?

    That seems to be the question a lot of online gaming operators are asking themselves at the moment.

    Regional markets seem to be the new online gaming battlegrounds for the established and less established operators. The pronouncements by the EU competition commissioner (Charlie McCreevy) that regional country markets need to open up their electronic borders to online gaming operators has encouraged a stampede into (primarily) under-developed EU markets.

    Established operators like Paddy Power (Ireland), Ladbrokes (UK), Expekt (Austria) and CentreBet (Australia), have market-leading presences on their home turf but are now widening their net to target in-country bettors in immature markets such as Spain, France, Germany and Italy. They are also competing with newer operators like Fubo.com, Gnuf and PartyBets.

    So – the question is – if you have a market leading brand and product in a particular market, does this translate to a natural success in a new regional market or you could say…

    …if you have built it, will they come? It’s a question that’s on the minds of a lot of people, spending a lot of cash in the gaming space.

    These “new” markets include Spain, Italy, France and Germany. The challenge is to localise a proven product in to markets that a) don’t have the same historical betting mentality as maturer countries and b) provide a betting and gaming experience that reflects the needs and wants of those new markets.

    A lot of operators ahve had a fairly easy ride in their home markets. The value of really being first to market (in the online space) in certain countries has given operators like Paddy Power, Sports Interaction, BWIN and CenterBet a real head start and has generated a lot of revenue, in a short period of time.

    These revenues have then allowed and supported further customer acquisition activities, as well as ensuring healthy balance sheets. This is where the “Field of Dreams” analogy starts to rear its head…

    There is evidence to suggest that operators that have successful operations in their own market, have assumed that by simply replicating this product and overall experience – in another local market eg: Spain – that the customers will continue to roll in. “We’ve built it, they will come…”. And yet, it seems like there’s a harder battle on the cards here.

    For example, when Ladbrokes announced that they were going to target the Italian market they talked about a 5 year plan and an investment of £100 Million. That was in 2006. They did secure an Italian license, and also announced that they would start by investing £1.3 million in an Italian odds-setting service. Over a year later, Ladbrokes have no more than 800 Italian accounts in betting on their site. That doesn’t seem much of a return so far…

    Paddy Power have pushed into Spain, it’s been a significant investment and my sources close to Paddy Power tell me that number of funded active accounts are low – and this is borne out by the fact that in their interim statement of the 3rd September in ’07 – there is no mention at all of their Spanish (or for that matter other local market) numbers. That may seem like a bit of a stretch by me – but I know PP’s fondness for numbers – and they ain’t there.

    There’s also a lot of other info that I’ve picked up from people involved in the industry, pointing to a real dogfight in the new local markets. In particular, I’ve been talking to the people who provide the software to operators (that I deal with regularly) and they’ve seen slower than expected growth in these areas.

    Why is this growth slow? Here’s my 2c…

    * Poor localisation by operators – a failure to appreciate the local nuances of language, syntax and tone has meant that the localised product may be theoretically correct, however it doesn’t read or scan correctly.

    Think of it as the equivalent of welcoming someone to your country by hositing their national flag – but outting the flag up, upside down.

    * Misunderstanding the “local” mindset – just because a country may be passionate about sport, doesn’t necessarily translate to a passion for betting. There needs to be a holistic approach that recognises that the reason that there may not be a local passion for betting and gaming because there hasn’t been a historical culture of betting. Educate the local market, give them opportunities to try simple things ie: a “How To Bet” tutorial focusing on a simple over/under bet.

  • Blogiscpline – The discipline of Blogging

    Tipping point, friendquest, repurposing, and my current personal favourite – aquadextrous (the ability to turn off taps in the bath with both feet) may all be considered part of the current lexicon of buzzwords, to which I want to add my own – “blogiscpline”.

    It’s the discipline of blogging.

    I originally started this blog as a way to allow me to put down some thoughts on the area that I work in (online gaming), outside the headspace confines of what area of work that I have to think about today. Hmmmm, that was about 4 months ago, and I haven’t written anything since. Go figure.

    I’m either a) too indisciplined to keep up with what I started (this blog) b) too busy to get the headspace to do it c) not engaged enough by the idea of putting down my thoughts on paper d) none or all of the above :-).

    I think that different people have different ideas about what is the discipline required to maintain an active and engaging blog. Simply updating something every day, may be of benefit to allow an individual to feel like they are achieving something – but then you come up against the argument of quantity VS quality. Is something that’s updated regularly but only carries incrementally interesting updates – of more value than a blog that’s updated less regularly, but those updates are much more interesting or relevant to the reader?

    This is where blogiscpline becomes interesting. Is the discipline of blogging about focusing on regular, incremental updates – making sure to be disciplined about updating your blog or…

    …is it more important to be disciplined about the content of your blog? Should you hold off on blog updates for the sake of them VS updating when you’re sure that you’ve got something relevent and engaging to say?

    Maybe I should stop right now then…

    Gaming Tip: I think that PartyGaming are turning a corner. They’ve just bought a good Racebook, and it looks like to me that they’ve finally got a good enough product mix to compete on the same playing field as the “proper” multi-product gaming operators. I think that they are worth holding in the medium term – purely to see if UIGEA might open up an exemption for Poker.

    I’ve goto some more thoughts on what is the right product mix for online gaming operators, but I’m going to have to aplly some decent blogiscpline to share them with you.